What Do We Know About Evolution of Top Wealth Shares in the United States?

28 Pages Posted: 2 Feb 2015

See all articles by Wojciech Kopczuk

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics; Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

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Date Written: January 2015

Abstract

I discuss available evidence about the evolution of top wealth shares in the United States over the last one hundred years. The three main approaches - Survey of Consumer Finances, estate tax multiplier techniques and capitalization method - generate generally consistent findings until mid-1980s but diverge since then, with capitalization method showing a dramatic increase in wealth concentration and the other two methods showing at best a small increase. I discuss strengths and weaknesses of different approaches. The increase in capitalization estimates since 2000 is driven by a dramatic and surprising increase in fixed income assets. There is evidence that estate tax estimates may not be sufficiently accounting for mortality improvements over time. The non-response and coverage issues in the SCF are a concern. I conclude that changing nature of top incomes and the increased importance of self-made wealth may explain difficulties in implementing each of the methods and account for why the results diverge.

Keywords: wealth inequality

JEL Classification: D31

Suggested Citation

Kopczuk, Wojciech, What Do We Know About Evolution of Top Wealth Shares in the United States? (January 2015). CEPR Discussion Paper No. DP10368, Available at SSRN: https://ssrn.com/abstract=2559309

Wojciech Kopczuk (Contact Author)

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

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Columbia University - School of International & Public Affairs (SIPA)

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

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